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EghtesadOnline: The number of bad checks have increased in the calendar month to June 21 three months after enforcement of stringent new rules to help improve credibility of check transactions.

Data released by the Central Bank of Iran shows that bounced checks jumped 15.3% in number to stand at 773,000.

In value of terms, the bounced checks were worth 280 trillion rials ($1.12 billion) -- up 20.7% on a monthly basis.

Checks with insufficient funds accounted for 9.7% of the total number of checks and 12.6% of the value of checks drawn during the mentioned period.

The ratio of bounced checks to total transacted checks was higher than the average 9.5% during the March 21 -June 21 quarter. It was 9% in the preceding month and 8.2% in the month to April 21, indicating that the number of people and businesses writing the checks and unable to meet their financial commitment has shot up.  

Business conditions apparently worsened in Q1 despite the fact that a reasonable decline was expected in bad checks after the new check law came into force in March to streamline the check issuance process as a whole.

In the reviewed period, 213,000 plus checks valued at 116 trillion rials ($464 million) were rejected in Tehran Province, accounting for 8.7% and 10.4% of the volume and value of drawn checks in the capital, respectively.

The ratio of bad checks to transacted checks in Kohgilouyeh-Boyerahmad Province was 17%, the highest among all provinces. North Khorasan Province was next at 14.1%. Lorestan Province was third at 13.8%.

Conversely, provinces with the lowest ratio were Gilan at 7.1%, Yazd 8.8% and Alborz 8.9%.

Insufficient funds in the accounts of issuers were the main reason why the checks were disallowed. More than 749,000 checks, the CBI said, worth 270 trillion rials bounced because of not sufficient funds (NSFs) or there was no money in the check issuers’ account.



Drawn Checks

Checkbook holders wrote 8 million checks in the reviewed month, which was 6.4% higher than the 7.47 million checks drawn a month before, showing a 6.4% rise.

The overall value of drawn checks increased 14.6% to reach 2,226 trillion rials ($8.9 billion) in the month. More than 2.5 million checks valued at 1,110 trillion rials ($4.44 billion) changed hands in Tehran Province during the month.

Tehran ranked first as the province with the highest share of exchanged checks in volume and value accounting for 30.9% and 49.9% of all drawn checks.

Isfahan was next with 11.3% of all drawn checks and 7.1% of the value of checks issued in the month.

Cashier checks rose significantly in the month as more than 545,000 worth 1,127 trillion rials ($4.5 billion) were processed by banks -- up 8.3% in number and 19.6% in value compared to the month before.

More than 179,000 checks worth 644 trillion rials were cashed in Tehran.

A cashier's check is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier. Cashier's checks are considered as guaranteed funds because the bank, rather than the purchaser, is responsible for paying the amount.


transactions Bad Checks